Accounts and Records Under GST

June 22nd

Under GST all indirect taxes (excise, VAT, service tax) will get subsumed into one GST, thus reducing the number of accounts required to be maintained.In our article, we have listed the various accounts to be maintained and other records that businesses need to keep under GST.

For example, under GST, a trader has to maintain the following a/cs (apart from accounts like purchase, sales, stock) –

  • Input CGST a/c
  • Output CGST a/c
  • Input SGST a/c
  • Output SGST a/c
  • Input IGST a/c
  • Output IGST a/c
  • Electronic Cash Ledger (to be maintained on Government GST portal to pay GST)
  • Accounting Under GST

    While there will be initial transition challenges, GST will bring in much clarity in many areas of business. One of the areas is accounting and bookkeeping. While the number of accounts is more apparently under GST, once you go through the accounting you will find it is much easier for record keeping. One of the biggest advantages a trader will have is that he canset offf his input tax on service with his output tax on the sale.

    Read our discussions on the accounting treatment of various transactions under GST answering queries on how to record and pass entries for the inter-state sale of goods, how to record utilisation of input tax credit etc.

    Electronic Cash & Credit Ledger

    Under this section we will discuss the mechanism of GST e-ledger and how does it work. E-ledger or electronic ledger is statement of cash and input tax credit in respect of a registered taxpayer. Once a taxpayer makes GST tax payment by cash, cheque, internet banking, RTGS or NEFT the amount is credited in their respective electronic ledgers namely:

  • Electronic Cash Ledger
  • Electronic Credit Ledger
  • These two e-ledgers are generated once after registering with common portal of GST called GSTN by a taxpayer.

    Period for Retention

    This sections talks about the period for which the said books of accounts and other records have to be maintained, i.e. how long the records need to be saved by the business entity. As per the GST law, every registered taxable person required to keep and maintain books of account or other records will maintain the books for at least 60 months, counted from the last date of filing of Annual Return for September of following year.

    Consequences of Not Maintaining Proper Records

    This section talks about the consequences on defaults in case of non-maintenance of proper records, improper treatment in books of accounts and other related provisions.

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